A total of 214 individuals and companies made 187.65 billion liras, or more than 3.7 billion US dollars in profits from three investment fund groups at the center of a market manipulation investigation in Turkey, according to findings announced by Justice Minister Akın Gürlek.
The investigation led by the İstanbul Chief Public Prosecutor's Office identified 141 individuals and 73 companies that each made more than 100 million liras from funds managed by Tera, Pusula and Hedef Portföy.
The individuals collectively earned 100.68 billion liras, while the companies recorded profits of 86.98 billion liras, according to the investigation findings (1 US dollar = 49.34 Turkish lira).
More than 500,000 people had invested in the funds affected by the crisis.
Gürlek told Sabah newspaper today that prosecutors had forwarded the identities of those who profited from the funds to the Savings Deposit Insurance Fund (TMSF).
The TMSF has begun formally notifying those on the list to return the money. Recovered funds will be held in accounts established to compensate affected investors.
Inside knowledge
Gürlek said investigators were focusing particularly on investors who sold their fund holdings and withdrew their money between Sep 13 and Sep 16, just before the crisis began.
According to the minister, investigators determined that these investors had exited the funds after receiving advance information about the situation. He said the investigation had been expanded to examine those transactions.
Treasury and Finance Minister Mehmet Şimşek separately announced that 17 funds available through the Turkish Electronic Fund Trading Platform (TEFAS) had been liquidated, with money belonging to 43,000 investors transferred to the relevant banks.
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Investigators found that 102 individuals made approximately 28 billion liras from Tera funds, while 38 companies earned about 62.08 billion liras.
Pusula funds generated approximately 69.7 billion liras in profits for 19 individuals and another 10 billion liras for 20 companies.
In Hedef Portföy funds, 20 individuals made about 2.98 billion liras, while 15 companies earned approximately 14.9 billion liras.
Background
The crisis began on Sep 17, when investment funds holding large positions in stocks with limited freely tradable shares struggled to meet investors' redemption requests.
The Capital Markets Board (SPK) subsequently suspended trading through TEFAS for funds managed by seven portfolio management companies and ordered the liquidation of 131 funds.
The regulator said funds managed by some portfolio companies had contributed to price movements in low-float stocks that could not be explained by the companies' financial performance or economic circumstances.
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Authorities ordered the liquidation of funds with a combined volume of approximately 18.3 billion US dollars.
The SPK had already tightened regulations on Aug 28, introducing stricter requirements covering portfolio concentration, related-party transactions, valuation methods and hedge fund operations.
Under Article 107 of Turkey's Capital Markets Law, transactions intended to create false or misleading impressions about the price, price movements, supply or demand of financial instruments can constitute market fraud. (VK)
